Transcript Document

PENSIONS 2013
Institute of Financial Accountants
19 June 2013
Pensions and wealth management group
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AIM listed – market cap circa £46 million
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Established 1991 – over 20-year proven and stable track record
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Assets under advice and administration - £3.5 billion
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270 staff; 54 consultants (offices in Leicester, London, Aberdeen and
Glasgow)
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6,000 small self-administered scheme (SSAS) and self-invested personal
pensions (SIPP) clients
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Strong client retention - 98%
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“Through personal and proactive delivery of trusted advice, building
long-term client relationships remains our core objective.”
Agenda
• Changing rules
2014
• Pensions & business
• Auto-enrolment
2009
2010
2011
2012
2013
2014
Changing pension rules
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Annual contribution allowance
— £50,000 per year now
— £40,000 per year 2014/15 tax year
— £50,000 carry forward until 2013/14 used
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Some already in new rules!
— Personal pensions – change 5 April 2014
— Company scheme Pension Input Period?
— E.g. 30 April = already £40,000
Changing pension rules
Lifetime Allowance
Maximum tax efficient value of pension
Over LTA = no tax free cash/excess tax
= 55%
Was £1.8 million, now £1.5 million
2014 = £1.25 million
Affected? Big pensions or long time to retirement
Doctors/dentist promotions in public sector schemes £54,000
pension in NHS scheme = £1.25 million
Changing pension rules
New protection(s)
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Fixed protection 2014
— Keep £1.5 million (cost = no more contributions)
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Personalised protection
— Fund £1.25 million
£1.5 million on 5 April 2014
— Keep fund value to £1.5 million
— Can contribute
Review clients – maybe apply for both?
Pensions & business
Uses of SSAS & SIPP
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Amalgamate pensions – new scheme
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New contributions (Corporation Tax Relief)
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Lend money back?
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SIPPs & shares in company
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Connected transactions
Small self-administered
schemes (SSAS)
Loanbacks
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50% of fund value
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Minimum rate of 1.5%
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20% repaid per year – 5 years
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Contribution in = loan out
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Security
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Creative solutions (not lender of last resort) & re-scheduling
Only SSAS!
SSAS & SIPP - Property
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Company owns property – has trading risk to property
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Sell to pension fund (SSAS & SIPP can borrow 50% of fund value)
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Lease back to business
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Rent = commercial lease (deduction from taxable profits)
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Property now owned by pension = secure
SIPPs & company shares
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SIPP can use fund to acquire shares in connected company
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50% of fund value is target maximum
 Risk
 Exit
 Pension not trading
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May go higher – case by case
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Effect = release capital to company & known investment risk to pension
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Tax issues? – taxable property
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Safest = service companies
Connected transactions
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SSAS & SIPP can transact
 with family/member
 with company
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No loans to members/connected family
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Members/ companies can lend to schemes
• Problem = need cash but below age 55?
SIPP/SSAS solution = buy shares/land/property off client
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Market values
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Keep death benefit, 100% lump sum
Auto-enrolment
Why now?
• 49% of UK population saving for retirement
• 50% who have a company pension scheme don’t join
• What about State Pensions:
Ratio of workers to pensioners
1901 – 10:1
2005 – 5:1
2050 – 2:1
That’s why!
What do employers
have to do?
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Know their staging date
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Decide on the pension arrangement to be used
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Assess their workforce
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Communicate
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Auto-enrol eligible jobholders and keep records
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Pay minimum contributions
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Post auto-enrolment (employer duties)
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Compliance (The Pension Regulator)
Who get auto-enrolled?
Contributions?
Contributions?
Salary, Wages, Overtime, Bonuses,
Commissions
Statutory Sick Pay
Qualifying Earnings Include
Statutory Maternity Pay, ordinary or additional
Statutory Paternity Pay
Statutory Adoption Pay
Qualifying earnings are between: £5,668 - £41,450
Different definitions of earnings:
• Qualifying earnings
• Tier1 – Basic x 9%
• Tier2 – Total x 85% x 8%
• Tier3 – Total x 7%
Things we hear?
Employer Attitudes
The Reality
We are OK, as we pay enough into our
scheme
Every scheme needs to be looked at for
various reasons
We will wait until the last minute as
there is no rush?
The process takes a lot longer than most
expect
We can produce the correct data no
problem
Many have not!
NEST will do everything for us!
NEST will not provide advice
We will just auto enrol everyone so we
don’t need to worry
All workers need to be classified and
communicated as required by tPR
We will just use the postponement
option to delay
You can, for the contribution but not the
communication!
Everyone will opt out anyway so it wont
end up costing us anything
Current opt out rates are low, and the
costs increase for employers
The Kudos process?
Kudos auto-enrolment support services outline
Initial client engagement
• Stage 1 Report – Staging dates
Detailed scheme review and initial cost analysis
• Stage 2 Report – Current analysis & cash flow options
Consultancy Decisions
• Qualifying scheme(s) options
• Postponement (all employees or part)
• Definition of pensionable salary
• Method (qualifying earnings or self certify)
• Recommendation
• Build, test & Implementation
• Communication solutions (generic or bespoke advice)
• Software administration solution:
, pension provider or in-house
Solving the problem
• Stage 1 report – Staging dates = free
Help you solve clients questions
• Stage 2 report – Scheme review & budgeting
1.
2.
Kudos report direct
White label with you
Minimum 10 reports + £250 minimum per report
(disbursements on top).
Add in your own time!
Any questions?
Disclaimer
The views provided in this presentation are for general information purposes only and represent the
opinion of the authors based on market conditions at the time of writing, which are subject to
fluctuations, and interpretation of current and proposed legislation and HMRC practice, which are
subject to change. Nothing in this document represents investment advice of any nature whatsoever,
and it does not constitute an offer or solicitation to purchase or sell any financial
instruments. Accordingly, to the extent permitted by applicable law, Mattioli Woods plc and Kudos
Independent Financial Services Limited do not accept any liability or responsibility for the information
contained in this presentation or any investment decision or other action that may be taken in reliance
upon the information contained in this presentation. Mattioli Woods plc and Kudos Independent
Financial Services Limited accept no responsibility for any errors of fact or opinion and assume no
obligation to provide you with any changes to their assumptions.
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